In Antone’s, A Bar 401, LLC v. American Property Insurance Company, the insured filed a declaratory judgment action seeking coverage for business losses that arose after New Jersey’s governor declared a state of emergency for the Covid pandemic and issued Executive Orders suspending the operations of non-essential businesses. The insurance policy at issue had coverage provisions for business interruption and losses caused by civil authority, as well as a virus exclusion. Relying on its decision on Mac Property Group v. Selective Fire & Casualty Insurance Company, which involved similar facts and legal issues, the court affirmed summary judgment in the insurer’s favor.
The insured bar experienced economic losses after businesses in New Jersey were suspended due to the Covid pandemic. While still in operation, the bar had to limit their hours and provide take-out services only. After the insurer denied their claim for business and income losses, the bar filed suit. The trial court granted summary judgment for the insurer on the basis that the virus exclusion was applicable and precluded coverage.
On appeal, the insured argued that the virus exclusion was inapplicable because their losses did not arise from Covid, but rather from the business suspensions due to the Executive Orders. They also argued that the virus exclusion was void because there was no anti-concurrent language applicable to the exclusion and that the insurer was regulatorily estopped from relying on it.
The virus exclusion of the policy had the following language: the insurer will not pay for the loss resulting from any virus. Giving this language its plain, ordinary meaning as required under New Jersey law, the court found that the policy language was unambiguous and precluded coverage for the bar’s claim. Turning to the insured’s causation argument and citing language from Mac Property, the court determined that the Executive Orders “neither prohibited access to plaintiffs’ premises nor prevented plaintiff owners from being on their premises, but merely restricted their business activities.” In other words, the Executive Orders could not be the efficient proximate cause of the losses because they were only issued to curb the Covid pandemic. Thus, the court held that the proximate cause of the bar’s losses was the Covid virus and not the Orders.
The court made short shrift of the insured’s argument regarding regulatory estoppel. It noted that the doctrine applies when an insurer makes misrepresentations to a regulatory body regarding the meaning and effect of language it as requested to include in its policies. Finding the record devoid of any evidence regarding misrepresentations to a regulatory body about the scope of the virus exclusion, the court held that the argument lacked sufficient merit to warrant further discussion.
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